A 24-hour-visit in Canberra without any upfront organization proved to be highly efficient in getting the right things done: understanding Canberra’s active culture of innovative technology-based entrepreneurialism. A meet and greet with James Deamer, Community Manager at the Entry 29 Start-up Community, shed a bright light on this unique characteristic and opened doors to even more. One last-minute phone call made that I could meet one of the key role players in the creation of Australia’s wind industry. While only 3 hours left on the clock, there was still time left to interview Nathan Steggel, co-founder of Windlab.
Although some might use them in the same way, there clearly is a distinction between invention and innovation. One speaks of an invention as “the creation of a product or introduction of a process for the first time”. An innovation, however, is when “someone improves on or makes a significant contribution” to something that has already been invented. Interestingly, you could think of Thomas Edison as an inventor and Nikola Tesla as an innovator when it comes to the electrical system that powers our world. Have you ever heard of the “War of Currents”? It’s probably one of the most heated debates amongst scientist in history…
The “War of Currents” was a battle between the visions of two geniuses in the 1880’s over whose electrical system would power the world. The rising question was: would it be Tesla’s Alternating Current (AC) or Edison’s Direct Current (DC)?
Edison, generally known as the iconic inventor of the light bulb, was the nemesis and former boss of Nikola Tesla. Some argue that Tesla was more the futurist aiming for disruptive technologies with no necessarily built-in market demand. However, it was Edison who had about 1,093 patents on his name with its company and managed to incorporate Direct Current as the standard in the early years of electricity in the US. One problem with Direct Current is that it is not easily converted to higher or lower voltages. It was Nikola Tesla who came up with an enlightening solution that is seen as one of the biggest revolutions in the evolution of the electricity system! Tesla was a charismatic Serbian-American man that ironically had a quite abnormal way of solving the Direct Current problem. Believe it or not, but he famously developed his vision of alternating current when he was reciting a passage of a Goethe poem in a Budapest park.
The “War of Currents” started when multiple companies entered the electricity system because of Tesla’s Alternating Current application. There was one company that had acquired Tesla’s valuable patent on Alternating Current and started to eat into market share directly after. Understandable as it is, Edison was afraid to lose the royalties he was earning from all his Direct Current patents. In response, Edison started a big campaign to discredit Alternating Current because it would be highly dangerous, which is true to some extent. At the peak of the war, this fear was commonly known as the “Electric Wire Panic”. His campaign eventually even led to the invention of the electric chair that found it’s application years after. While years were passing by, more and more, Edison was becoming marginalized in his own company. Therefor he decided at some point to leave the electric power business and the end of the war was near. Finally, the war came to an end when the two biggest companies in Alternating Current and Direct Current merged. Because of this, in all of a sudden, this company controlled about three quarters of the US electrical business. Can you imagine? That’s huge! This company still exist and is generally known under the name General Electric. Result? Alternating Current systems had become dominant. However, Direct Current is still present when look at for example renewable energy. Solar panels, wind turbines and batteries, they all produce a Direct Current.
The moral of this story is that inventions are highly important and even when there is no direct built-in market need. At some point, such knowledge will find its application and this is what brings me to the story of the importance of science for the sake of science.
Where Does Windlab Have its Origins?
Windlab originally was founded back in the early 2000’s. However, the foundations for this company were built many years before. Windlab is a spinoff company of the scientific research institute CSIRO. CSIRO, which stands for the Commonwealth Scientific and Industrial Research Organization, is Australia’s leading national science agency that is pushing the edge of what’s possible for over 85 years. It is a government owned entity that has improved the lives of people significantly with inventions like the most popular way to connect computers without wires: Wi-Fi. Seriously? Yes, it’s true and it’s sincerely not American. So every freelancer out there that’s working in a coffee shop the whole week… Thank CSIRO!
Its foundations got quite a long history, going back to the 70’s. Back then, when renewable energy wasn’t particularly big on the political agenda, there was a research unit at CSIRO specialized in flow dynamics. They were doing fundamental research. This unit researched the dynamics of flows by modelling flows over hills, flows where you’ve got a canopy or a forest and flows in steep and complex terrain. Interestingly, flows interact with their surroundings, think of a forest for example. This research unit didn’t just do this for wind specifically, but also for carbon flux for example. Carbon flux? Yeah, carbon flux. It influences flows because of the interaction between carbon dioxide and for example a forest.
This was that critical point where CSIRO was heavily involved in fundamental research like Edison and Tesla were during the 1880’s. So going back to the 60’s and 70’s, it was very much just science for the sake of science. This fundamental research had actually no application or specific market need. However, at some point it would and that happened in the mid-90’s.
“… suddenly wind energy became important and the CSIRO had already completed significant ground-breaking research on wind flows over hills and canopies. It was therefore decided to set-up the Wind Energy Research Unit, specifically to apply this knowledge to the field of wind energy.” – Nathan Steggel
The wind research unit CSIRO developed a wind mapping and wind prospecting technology that proved to be highly effective in finding good sights for the deployment of wind energy. This research unit became successful in the consulting environment for a number of years. At some point, this research unit became so successful that they decided to spinout under name of Windlab in 2003.
“This is a marvellous innovation story. Fundamental research from the past finding a commercial application 20 years later that spins off an independent company. Recently CSIRO has had its budget cut massively and they’re being hindered from doing real science for the sake of science. Instead they’re forced to undertake commercial research and consulting projects. They are cutting off the potential to know things for the sake of knowing – who knows what future innovation we are missing out on – the next wifi?” – Nathan Steggel
What Is the Success Factor of Windlab?
In the years that followed Windlab became very successful in prospecting good sights for wind farms with their innovative wind mapping techniques. Today, they’re developing more than 50 wind farm projects worldwide with subsidiaries in Canada, South Africa and the USA. By the end of 2013 they got even selected as the winner of the Export Awards in the category of Infrastructure and Construction.
One of the core elements that made Windlab successful over the years is their model centred on community involvement. One of their most successful and innovative wind farm projects in Australia is the Coonooer Bridge Wind Farm with six wind turbines and a total generation capacity of up to 19.4 MW. This project isn’t specifically special when it comes to the size of the project or the amount of wind turbines. The element that made this project unique and a one of a kind was the way they involved the local community. Furthermore, the Coonooer Bridge Wind Farm is about to generate the cheapest wind energy of Australia!
The rationale behind the model is engagement with the entire community, so even the landowners that life within a certain distance from the project. Windlab essentially gave all the landowners free shares in the project. Traditionally, it was just the landowner that hosted the turbines that gained from the project. Windlabs’ opinion was that even those that life within a certain distance should benefit from such a project in some value. This system isn’t necessarily about reducing local opposition against wind farms. The real point is just to come up with a fairer system, because the deployment of a wind farm sincerely has an impact on the entire community. And people deserve to actually be part of the whole solution.
“It is natural that with any new infrastructure project there will be concerns about the project. A fair and transparent community engagement model is therefore vital. We believe our model, which often includes local ownership in the project, helps to keep the discussions open and focussed on a fair outcome for the community” – Nathan Steggel
Today, Windlab is still building wind farms all over the world on the basis of this philosophy to involve the local community on some way. Take one of their newest projects for example, The Amakhala Emoyeni wind farm project in Southern Africa. This project got a trust structure where there is a couple of local trust that have been set up that own a percentage of the project and those trusts will effectively get revenue from the profits. This profit helps to fund social projects in the region that range from education and health to the creation of local jobs.
What Is the Biggest Hurdle in Today’s Industry?
Interestingly, the biggest hurdle in Australia right now is getting Power Purchase Agreements to sell the electricity from the wind farms. In the USA there is a rising trend that large energy users like IKEA and Google directly buy their renewable energy from the projects instead of the retailers. The big retailers in Australia have a really dominant position in controlling the market space. Especially the big three that own generating assets aren’t keen on committing to renewable energy, because they essentially devalue their existing assets. Do you remember the Merit Order Effect? You could argue that there is plenty of market opportunity for retailers like VanDeBron that solely operate as a marketplace for renewable energy projects and energy users.
“At some point customers could potentially bypass the big retailers and buy their electricity directly from such projects. However, at present I think most people prefer to rely on government policy to increase the amount of renewable energy.” – Nathan Steggel
I think that they key here is to change people’s perception of electricity. Society perceives electricity as abundant and always accessible. You could argue that it is a low-interest product. It should be our goal to put the relevance of electricity back up on people’s agendas. People should be aware of the fact that electricity has an important role in powering their everyday life and these days still is heavily reliant on fossil fuels. Therefore, transparency on the origin of electricity should be a key element in the transition of our worldwide electricity system!
“I think the key is involvement and ownership. Ten years ago it didn’t make any sense to install solar on your roof. Nevertheless, rooftop solar in Australia is a genuine success story. I believe it’s not just the government subsidies that enabled this – it is on their roof, they own it and they are in control. For me large-scale projects need to learn from this – retailers should encourage their customers to feel involved and that they own a piece of these important assets.” – Nathan Steggel